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Ghorbanian v. Guardian Life Insurance Company of America

United States District Court, W.D. Washington, Seattle

April 28, 2017

ABRAHAM GHORBANIAN, D.D.S., Plaintiff,
v.
GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, et al., Defendants.

          ORDER DENYING DEFENDANTS' MOTION FOR SPOLIATION SANCTIONS

          RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         This matter comes before the Court on Defendants' Motion for Spoliation Sanctions. Dkt. #81. Defendants seek an Order dismissing this case with prejudice on the basis that Plaintiff intentionally destroyed or failed to preserve documents related to his occupational and professional duties during the time periods relevant to this case. Id. Defendants assert that they have been prejudiced because the documents they believe once existed but have since been destroyed are necessary to rebut Plaintiff's testimony as to the essential functions of his job in 2011 and 2012 after his shoulder surgery. Dkt. #96 at 6. Plaintiff responds that there is no evidence he ever destroyed any documents in this mater, that he has not lied to the Court in previous briefing about the existence of any evidence, and there is no actual prejudice to the Defendants as they allege. Dkt. #94. Plaintiff further argues that to the extent any documents were destroyed prior to 2011, when the potential for litigation first arose, he had no duty to preserve any such documents, and therefore he cannot be sanctioned for any alleged conduct occurring prior to that date. Dkt. #94 at 19-21. For the reasons set forth herein, the Court DENIES Defendants' motion.

         II. BACKGROUND

         Plaintiff began practicing dentistry in Washington State in 1998, and remained involved in that occupation until 2012, when he moved to California. Dkt. #15 at 2. Shortly after beginning his practice in Washington, Defendants issued two disability policies (the “Policies”) to Plaintiff, which are at issue in this case. The initial Guardian policy was issued on February 23, 2001, with two Physical Impairment Riders, containing certain exclusions from coverage. Dkt. #32 at 2. The first rider excluded “losses resulting from impairment of the cervical spine or cervical nerve roots, ” and the second rider excluded “losses resulting from disorders of the right shoulder.” However, the policy permitted Plaintiff to apply for the cancellation of both riders if he received no health care services for the conditions specified in them for five years after issuance, and if a physician selected by Guardian agreed in writing that a full medical recovery had occurred. Id. The five-year waiting period was reduced to one year following the merger of Guardian and Berkshire in July 2001. Id. at 3.

         Accordingly, on or around February 11, 2002, Plaintiff requested the removal of the exclusions and stated in his application that he had “not been treated or seen by any physician, acupuncturist, naturopath, or physician for any condition related to neck back or spine, shoulder.” Id. at 2-3. Defendants granted Plaintiff's request on March 11, 2002, and removed the riders/exclusions. Id. at 3. Plaintiff subsequently applied for a second disability policy from Berkshire. Id. at 4. The Berkshire policy, mirroring the Guardian policy, did not contain the riders/exclusions. Id.

         Plaintiff alleges in this lawsuit that he was involved in an automobile accident in Washington in June 2002. Dkts. #1, Ex. A at A-5, ¶ 11 and #100 at ¶ 11. Afterward, Plaintiff was treated in Bellevue, Burien, and Issaquah, Washington. Dkt. #15 at 2. Plaintiff was allegedly involved in a second automobile accident in June 2005. Dkts. #1, Ex. A at A-5, ¶ 12 and #100 at ¶ 12. Subsequently, Plaintiff had surgery in Seattle, followed by physical therapy in Redmond, Washington. Dkt. #15 at 2. In 2011, Plaintiff submitted a disability claim based on the injuries he sustained from his auto accidents. Dkts. #1, Ex. A at A-5, ¶ 13 and #100 at ¶ 13.

         On or around April 14, 2012, Defendants denied Plaintiff's claim on the basis that “he was not considered totally disabled from his pre disability occupational duties” because his “pre disability occupation was an executive and owner of dental practices rather than a practicing dentist.” Dkt. #1, Ex. A at A-6, ¶ 16. The instant law suit followed, alleging a variety of claims, including breach of duty of good faith and fair dealing and breach of contract. Dkts. #1, Ex. A and #100.

         III. DISCUSSION

         A. Legal Standard

         This Court has a wide range of inherent powers to govern litigation processes. Chambers v. Nasco, 501 U.S. 32, 43, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991). One of these is the discretionary power to levy appropriate sanctions against a party who prejudices its opponent through the spoliation of evidence that the spoliating party had reason to know was relevant to litigation. Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993).

         Spoliation is defined as the “destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence, in pending or future litigation” once the duty to do so has been triggered. Kearney v. Foley & Lardner, LLP, 590 F.3d 638, 649 (9th Cir. 2009) (internal quotation and citation omitted). A party seeking sanctions for spoliation first bears the burden of establishing that the opposing party destroyed relevant evidence. Ryan v. Editions Ltd. W., Inc., 786 F.3d 754, 766 (9th Cir. 2015). To determine whether spoliation occurred, the majority of courts use some variation of a three-part test: “(1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a ‘culpable state of mind;' and (3) that the evidence was ‘relevant' to the party's claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.” Apple Inc. v. Samsung Elecs. Co., 888 F.Supp.2d 976, 989 (N.D. Cal. 2012) (citing cases).

         If spoliation is found, then courts generally consider three factors to determine whether and what type of sanctions to issue: “(1) the degree of fault of the party who altered or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3) whether there is a lesser sanction that will avoid substantial unfairness to the opposing party.” Apple Inc. v. Samsung Elecs. Co., 888 F.Supp.2d at 992; see also Leon v. IDX Sys. Corp., 2004 U.S. Dist. LEXIS 31361, 2004 WL 5571412, at *3 (W.D.Wash. 2004) aff'd., 464 F.3d 951 (9th Cir. 2006).

         B. Alleged ...


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